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provided that our prices can approach near the German prices. For over that large section of the world-market under the flag of the Allied Powers there remains a strong sentimental preference for our goods over those of Germany, which can be 'cashed' in selling prices, provided that the preference is such as the purchasers think they can afford. Moreover, even under existing conditions there are certain lines of production where our hold upon the market has been too strong to be displaced by cheaper German goods. Finally, the production of more export goods, competing with those of Germany, will, by increasing the total supply, reduce the selling prices still further, and by stimulating effective demand in the foreign markets which have hitherto been depressed, will restore a higher total quantity of export trade beyond the limits of Germany's capacity to supply. Thus, it would appear temporarily advantageous to lower our wages towards the German level.

This is the supreme temptation which every period of trade depression presents to the peoples with higher standards of living, an immediate gain in markets and employment if they will lower these standards towards the level of those other countries which have been able to get the lion's share of the depressed and restricted world-market because of the cheapness of production. The present case is only an extreme example of the position which recurs in every general cyclical depression. It has been exaggerated by the circumstances of the War, and especially by the pressure upon Germany for reparations, which forces her continually to inflate her currency and so secretly